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I've been asked to give references a few times and here are some common questions I've been asked.

1) Describe one of the stong points about the applicant?
2) Describe one of the weak points about the applicant?
3) How long have you known the applicant?
4) Would you hire the applicant?

As far as I know you can say what you want. I'm not sure if there are any legal ramifications to speaking your mind. It is a free country after all. I'm always honest.

You should always ask people if you can use them as a reference prior to doing so. And make sure the person you're getting the reference from actually thinks highly of you. I have given a bad reference in the past. I've also told someone not to use me as a reference.

Apparently some companies have a policy of only confirming the dates.
It is possible that saying anything more can lead to a lawsuit (if the former employee finds out and disagrees with what you said).